Nasdaq (Nasdaq:NDAQ) have officially announced that Shanghai Futures Exchange (SHFE), one of the world’s largest futures markets, has launched a new market surveillance platform powered by SMARTS, Nasdaq’s flagship surveillance...

Multi Commodity Exchange has signed an agreement with Mozambique Commodities Exchange also known as Bolsa De Mercadorias De Moçambique (BMM) for strategic co-operation.BMM plans to develop commodity m...

China's securities regulator ordered the country's major commodity futures exchanges this week to control speculative trading activity, sources told Reuters, after a surge in prices sparked fears of a boom-and-bust cycle. In response, commodity...

China's securities regulator ordered the country's major commodity futures exchanges this week to control speculative trading activity, sources told Reuters, after a surge in prices sparked fears of a boom-and-bust cycle.

A futures exchange is an institution, organization, or association that serves as a market for the trading of futures contracts. In addition to the facilitation of trading contracts, futures exchanges also serve as a clearing house for the transfer and settlement of the physical commodities underlying most futures contracts.

It should be noted that while the majority of contracts traded on a futures exchange are commodities, futures exchanges also deal in other types of contracts, usually relying on financial instruments.

Technology has been one key factor driving the industry, with almost all the established exchanges adopting electronic trading in some form or another while new generation exchange platforms are fully electronic.

Commodities Futures

The vast majority of futures contracts traded on a futures exchange are commodities futures contracts. Raw materials, such as corn, sugar and crude oil, for example, are representative of the items traded as commodities on a futures exchange. Producers of raw materials will generally sell contracts to deliver raw materials at a future point in time to a consumer that will use the raw materials to provide goods or services.

This type of trading allows both parties involved to establish the price at which they will do business. In this way a farmer whose crops are still in the field can establish the price for which those crops will be sold.